Image source: Tom Fisk
On May 22, 1992, the initial text of the Convention on Biological Diversity was adopted. As such, the International Day for Biological Diversity is celebrated on this day every year. Biodiversity loss is one of the most pressing issues governments and corporations face today, as the world’s economy is heavily reliant on services provided by nature. Ecosystem services such as pollination, water purification, flood control, medicinal plants, recreation, and more are estimated to be worth over a hundred trillion dollars annually with many industries around the world moderately or heavily reliant on nature.
Despite the fact that awareness of the importance of mitigating biodiversity loss is growing, companies around the world are lagging behind. According to S&P Global, fewer than 30% of companies listed in the S&P Europe 350 and just 7% of S&P 500 companies have set tangible biodiversity targets, despite the fact that business activity in industries such as agriculture, energy generation, fashion, and infrastructure are responsible for over 90% of anthropogenic biodiversity loss. However, with new developments such as the Global Biodiversity Framework (GBF) that was ratified in Montréal in December 2022, and the Taskforce on Nature-related Financial Disclosures (TNFD) moving closer to releasing a standardised framework for biodiversity reporting, companies must act proactively to avoid being caught flat footed.
The Global Biodiversity Framework (GBF) that came out of COP15 in 2022 was a historic framework with the same significance that the 2015 Paris Climate Agreement had on the fight against climate change. 190 countries around the world signed the GBF, which:
- Lays out goals for signatories to achieve such as protecting 30% of the planet’s land and waters by the end of this decade, boosting funding for developing countries to improve biodiversity protections, ecosystem restoration, and more. This will have wide-ranging impacts on companies, as signatories have committed to significantly reducing subsidies for industries that damage biodiversity such as agriculture, fashion, fisheries, and fossil fuels.
- Introduces new regulations which state that large companies and financial institutions will have to begin tracking and disclosing the biodiversity impacts that their operations have through their supply chains.
Biodiversity impact disclosures are still a relatively new concept, especially when compared to climate change related disclosures, but there are new methods on the horizon. For example, a group of Finnish scientists at the University of Jyväskylä have developed a method of measuring the impact a company has on both land and aquatic ecosystems, using species at risk of extinction as a metric.
When the Task Force on Climate-related Financial Disclosures (TCFD) was established in 2015, it signalled a turning point in corporate environmental strategy by giving companies a framework to measure and report their carbon emissions. Similarly, in 2021, the Task Force on Nature-related Disclosures (TNFD) was launched to bring the same level of awareness to biodiversity loss. The TNFD will help companies to:
- Comply with new biodiversity disclosure regulations that are coming down the pipeline in the future, focusing on both physical and transitional risks.
- Provide more guidance on how companies can go about assessing their impact such as the LEAP integrated assessment method. LEAP is an acronym for locating where a company’s operations rely on nature, evaluating the level of dependency on nature, assessing potential nature risks the company is exposed to, and preparing a strategy to mitigate the risks.
Businesses that are proactive in complying with the TNFD are likely to gain a competitive advantage, as early investment in nature-loss mitigation results in a more resilient supply chain and lower risk exposure.
The role of corporations in climate change and biodiversity loss mitigation cannot be understated. The past ten years have seen a surge of public awareness and corporate action towards emissions reductions, and it is long overdue for biodiversity loss to receive the same amount of attention..
Ira Srivastava is Competent Boards’ Program Coordinator.
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